Supplementary Demands for Grants

Supplementary Demands for Grants

Why in News? 

Recently, the Lok Sabha approved the second batch of Supplementary Demands for Grants for 2025-26, involving a gross additional expenditure of ₹2,81,289.26 crore, with a net cash outgo of ₹2,01,143 crore after accounting for savings and enhanced receipts. 

• The Finance Minister also announced a ₹1 lakh crore Economic Stabilisation Fund (ESF) to shield India’s economy against global shocks, such as geopolitical conflicts in West Asia and supply chain disruptions. 

What are Supplementary Demands for Grants?

• About: Supplementary Demands for Grants refer to additional budgetary approvals sought by the Government during a financial year when the originally sanctioned funds are insufficient to meet expenditure. 

• Purpose: The primary purpose is to bridge the gap between approved budget allocations and actual expenditure needs and allows the government to finance urgent defence needs, disaster relief, or economic interventions without waiting for the next Union Budget cycle.

• Constitutional Basis: The constitutional authority for these grants is provided under Article 115, which allows the government to seek supplementary, additional, or excess grants during the financial year when necessary.

• Managed By: The preparation and coordination of Supplementary Demands are managed by the Ministry of Finance, particularly the Department of Economic Affairs and Department of Expenditure.

• Expenditure under these grants is audited by the Comptroller and Auditor General of India, ensuring financial accountability. Audit findings are later examined by the Public Accounts Committee of Parliament.

• Parliamentary Approval: Supplementary Demands must be approved by the Lok Sabha, as it holds the exclusive power over financial matters. 

• Nature of Expenditure: Supplementary grants may cover revenue expenditure (such as subsidies, salaries, and welfare schemes) or capital expenditure (infrastructure, defence procurement, or investment projects). 

• Types: Under the parliamentary financial system, the categories include Supplementary Grants, Additional Grants, Excess Grants, Vote of Credit, Vote on Account, Token Grants, and Exceptional Grants, each addressing different financial requirements during the fiscal year.

• Approval Process: The process begins with ministries submitting requests to the Ministry of Finance, followed by scrutiny and consolidation. 

• The demands are then presented in Parliament, debated, and voted upon, after which the Appropriation Bill is passed to authorize withdrawal from the Consolidated Fund.

Other Types of Supplementary Grants

• Additional Grant: An Additional Grant is provided when a completely new service or programme arises during the financial year that was not originally included in the Union Budget. Since such expenditure was not anticipated earlier, the government seeks fresh approval from Parliament to finance the new activity. 
• Excess Grant: An Excess Grant is granted when actual government spending exceeds the amount approved by Parliament for a service in that financial year. The demand for excess grant is presented after the financial year ends, and it must first be examined by the Public Accounts Committee before being voted by the Lok Sabha for regularization.
• Vote of Credit: A Vote of Credit is provided to meet unexpected and urgent financial demands where the exact details of expenditure cannot be specified in advance. It is often described as a “blank cheque” given by Parliament to the executive to handle emergencies. 
• Vote on Account: A Vote on Account allows the government to withdraw funds in advance from the Consolidated Fund to meet short-term expenditure before the full budget is passed. It is usually granted for about two months and roughly one-sixth of the estimated annual expenditure to ensure that government operations continue.
• Token Grant: A Token Grant is used when funds for a new service can be arranged through re-appropriation (transfer of funds) from another budget head without increasing total expenditure. For parliamentary approval, a token amount of ₹1 is presented and voted in the Lok Sabha. 
• Exceptional Grant: An Exceptional Grant is sanctioned for a specific and special purpose that does not form part of the regular services of the current financial year. It is granted for unique or one-time activities outside the normal budget framework and requires separate parliamentary approval.